Your telegram April 8th Yampi. [1]

In our understanding Cabinet decision prohibiting exportation of
iron ore was of such a nature as to leave little room for any
compromise and we do not consider there are any new factors
introduced since decision taken which warrant any variation of the
policy decided upon. [2] As we see the position, Cabinet must
adopt a firm and unequivocal attitude otherwise our difficulties
both internal and external will progressively increase. The public
statement notifying Cabinet's decision should, we recommend,
embrace the following points
1. Commonwealth Government is satisfied that accessible iron ore
resources of Australia are so limited as to compel their
conservation for Australian industrial development.

2. The information in the hands of the Government is of such a
character as to warrant urgent action being taken to prohibit the
export of iron ore mined in Australia.

3. Careful consideration has been given to the proposal made that
licenses to export limited quantity of iron ore should be granted
by the Commonwealth Government. The Commonwealth Government has
come to the final conclusion that such action would be totally
inconsistent with the policy which it has been compelled to adopt.

In the opinion of the Commonwealth Government the future needs of
Australia require conservation of the whole of the ore resources.

4. The prohibition on export would apply to all Australian mining
interests and would apply to all countries.

Our own comments are as follows:

It has been our experience and the experience of other countries
that if we are to avoid progressively increasing difficulties with
Japan with regard to any contentious question a firm attitude is
required from the outset. It is certain that on a question of a
non discriminatory export prohibition being applied by Japan
Japanese Government would not admit right of any country to
challenge it. In any correspondence with the Japanese Consul-
General we think endeavour should be made to notify him on the
basis conveying information only as decision will affect apart
from one Australian company viz. Broken Hill Pty Ltd a British
Company and a Japanese Company. Should subsequently Japanese
Consul-General under instructions from his Government endeavour to
make an inter Governmental negotiation of the question we consider
he should be informed that the Commonwealth Government is prepared
to enter into correspondence only on the basis that it concerns an
investment by a private company.

We can only see progressively increasing trouble if any prospect
is held out that ultimately Commonwealth may be prepared to issue
licenses for the export of limited quantities. Japanese Company
may take this loophole to install machinery now at Singapore and
on order. There is less likelihood of division of opinion among
Australian public if immediate embargo imposed than if continual
recurring discussions take place with regard to iron ore resources
and the possibility of the export of iron ore under the license
system. Should protracted discussions occur then present opportune
moment may pass. Japan is otherwise engaged and is experiencing
both political and financial difficulties and if some period of
time is to elapse before final decision made then we might find a
changed situation.

We consider nothing should originate with the Commonwealth
Government on the question of compensation and any claims
submitted should be resisted unless prohibition appears likely to
raise external political difficulty or leads to majority of
trading difficulties or appears almost certain to adversely affect
wool markets or unless Brasserts specifically establish that the
Commonwealth Government tacitly approve Yampi activities and
should as a matter of equity be deemed to have encouraged an
irrecoverable expenditure of money.

Finally as we see it the sooner the decision is announced the
better; the less public discussion there is on iron ore resources
the better; the firmer our attitude at the outset the better. We
would suggest that you might consider taking the press into your
confidence with a request for co-operation.

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